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Published: Fri, 02 Feb 2018

Important To Understand Contract Law Basic Principles

In order to understand meaning of sale of goods and or service agreements, it is also important to understand the basic principles of contract law. Contract law is about keep in force promises and also making them legally binding without considering whether there is something in writing to this effect. Despite the word ‘contract’ and contrary people belief that a written contract is not needed in order for obligations to exist in law. A contract can also be formed by orally or by connections, or one party making an offer to the other party and the other party accepting the offer. When purchasing something item in shop or taking a taxi are all examples of this offer and accepting the offer. Of course it must be confirm that both offer and acceptance were understood and communicated were by both parties and that both parties were legally capable of making promises, and also something was being offered in exchange for the promise that the other party made, for example money. And while ‘putting it in writing’ or not it is required for the legally binding contract to exist.

An offer can be defined as a statement of willingness to contract on detail terms made with the intention that if the contract is accepted it shall become a binding contract. An offer can be an express or implied from conduct.

Acceptance of an offer also creates a legally binding contract provided that any persisting prerequisites are satisfied. An offer can be accepted different means, also if offer specifies the means by which it must be accepted, then only that method will suffice to perfect the formation of the contract.

Acceptance is sometime communicated either orally or in writing. It may also be understood by the conduct of the parties. It is not open for the offer or to say that the offer will be treated as accepted by the offered unless he hears differently from them. Mere silence and inaction is inadequate to constitute an acceptance.

Acceptance can also take place while the offer is in force, namely that if the offer has not been revoked or allowed to lapse and it should be on the same terms as the offer. Where there is a variance between the offer and the purported acceptance, the purported acceptance is treated as a counteroffer.

Although it is usually the wisest option, legally binding contracts do not just apply to contracts set out in writing. Under the eyes of the law verbal contracts are just as legally binding as written contracts. A contract is basically an agreement between two parties, for example, one party supplies a service and the other pays for it. Regardless of whether this contract is set down in writing or verbally it is still a binding contract under law.

Example legally binding contract of different side

This is on “Jones -v- Padavattan 1969 was about an agreement between a mother and daughter ~the mother had promised to support her daughter during her studies the daughter argued -the judge decided that it had not been intended to be legally binding, so it was a domestic agreement.” (www.articlesbase.com)

Also on “Simkins -v- Pays 1995, the mother and daughter had intended to be legally bound by jointly entering a competition to share the prize won, it was a contract.” (www.articlesbase.com)

Unfair Terms of Contract of (1977)

“Although the contracts described above are legally binding, it does not mean that there is absolutely no way out of a legally binding contract. The terms and conditions set out in a contract are of paramount importance when disputes reach the legal courts. Where consumers are concerned, unfair contract terms and a lack of good faith on behalf of the trader may mean that the contract is not legally binding.

The basic rule as to what constitutes an unfair contract term is that there is a significant imbalance in the terms towards one of the parties’ rights and obligations. This imbalance will usually be detrimental to the consumer, and the trader will usually have shown a lack of good faith and will not have acted openly or fairly towards the consumer.”(www.contractsandagreements.co.uk)

“These terms are implied into contracts falling within the Act. Breach of these terms by the seller may give rise to an action for damages, and in the case of those terms which are also conditions, termination of the contract.” (http://en.wikipedia.org)

“Implies a term that the seller has the right to sell the goods. This covers situations where the seller is selling stolen goods (whether the actual thief or a subsequent sale in the chain). This term is a condition in all sales.

A buyer who treats the contract as repudiated is entitled to return of the full purchase price even if they have enjoyed use of the goods for some time.”(http://www.e-lawresources.co.uk)

This is an example of Rowland v Divall [1923]. The claimant, a car dealer, bought a car from the defendant for £334. He painted the car and put it in his showroom and sold it to a customer for £400. Two months later the car was impounded by the police as it had been stolen. It was then returned to the original owner. Both the claimant and defendant were unaware that the car had been stolen. The claimant returned the £400 to the customer and brought a claim against the defendant under the Sale of Goods Act.

The defendant did not have the right to sell the goods as he did not obtain good title from the thief. Ownership remained with the original owner. The defendant had 2 months use of the car which he did not have to pay for and the claimant was not entitled to any compensation for the work carried out on the car.